Executive Summary

Most of the policy discussion about stimulating innovation has focused on the federal level. This study focuses on the significant activity at the state level, with the goal of improving the public’s understanding of key policy strategies and exemplary practices. Based on a series of workshops and conferences that brought together policymakers along with leaders of industry and academia in a select number of states, the study highlights a rich variety of policy initiatives underway at the state and regional level to foster knowledge based growth and employment. Perhaps what distinguishes this effort at the state level is most of all the high degree of pragmatism. Operating out of necessity, innovation policies at the state level often involve taking advantage of existing resources and recombining them in new ways, forging innovative partnerships among universities, industry and government organizations, growing the skill base, and investing in the infrastructure to develop new technologies and new industries. Many of these initiatives are being guided by leaders from the private sector and universities.

The objective of the study is not to do an empirical review of the inputs and outputs of various state programs. Nor is it to evaluate which programs are superior. Indeed, some of the notable successes, such as the Albany nanotechnology cluster, represent a leap of leadership, investment, and sustained commitment that has had remarkable results in an industry that is actively pursued by many countries. The study’s goal is to illustrate the approaches taken by a variety of highly diverse states as they confront the increasing challenges of global competition for the industries and jobs of today and tomorrow.

Faced with the challenges of fostering regional growth and employment in an increasingly competitive global economy, many U.S. states and regions have developed programs to attract and grow companies as well as draw the talent and resources necessary to develop innovation clusters. These state and regionally based initiatives have a broad range of goals and increasingly include



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Executive Summary Most of the policy discussion about stimulating innovation has focused on the federal level. This study focuses on the significant activity at the state level, with the goal of improving the public’s understanding of key policy strategies and exemplary practices. Based on a series of workshops and conferences that brought together policymakers along with leaders of industry and academia in a select number of states, the study highlights a rich variety of policy initiatives underway at the state and regional level to foster knowledge based growth and employment. Perhaps what distinguishes this effort at the state level is most of all the high degree of pragmatism. Operating out of necessity, innovation policies at the state level often involve taking advantage of existing resources and recombining them in new ways, forging innovative partnerships among universities, industry and government organizations, growing the skill base, and investing in the infrastructure to develop new technologies and new industries. Many of these initiatives are being guided by leaders from the private sector and universities. The objective of the study is not to do an empirical review of the inputs and outputs of various state programs. Nor is it to evaluate which programs are superior. Indeed, some of the notable successes, such as the Albany nanotechnology cluster, represent a leap of leadership, investment, and sustained commitment that has had remarkable results in an industry that is actively pursued by many countries. The study’s goal is to illustrate the approaches taken by a variety of highly diverse states as they confront the increasing challenges of global competition for the industries and jobs of today and tomorrow. Faced with the challenges of fostering regional growth and employment in an increasingly competitive global economy, many U.S. states and regions have developed programs to attract and grow companies as well as draw the talent and resources necessary to develop innovation clusters. These state and regionally based initiatives have a broad range of goals and increasingly include 1

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2 BEST PRACTICES IN STATE AND REGIONAL INNOVATION INITIATIVES significant resources, often with a sector focus and often in partnership with foundations, universities and the private sector. Increasingly, they seek to leverage complementary federal programs to support the development of regional centers of innovation, entrepreneurship, and high-technology development. These developments mark a significant change in paradigm. For much of the Twentieth Century states pursued economic development by seeking to recruit companies from other states by offering a more competitive business and regulatory environment, lower taxes, supportive government policies, and financial and infrastructure incentives. States still do this and sometimes see other states as competitors, but increasingly they see them as partners as well. Indeed, many states are shifting their policy focus to address the competition that has emerged from other regions of the world for leadership in the industries of the future. To better understand these policies and their impacts, a committee of the National Academies Board on Science, Technology, and Economic Policy (STEP) reviewed regional and state innovation programs across a limited number of highly diverse states. These conferences, held in Arkansas, Hawaii, Michigan, Ohio, Illinois and New York, have generated an improved understanding of the challenges associated with the transition of research into products, the practices associated with some successful state and regional programs, and their interaction with federal programs and private initiatives. The common element in each of the regional meetings is the growing determination of the state and regional authorities and the private sector to enhance technological capacity, university-industry connections, and economic growth in the region for current and future generations. OBSERVATIONS FROM THE CASES The experience of states and regions examined in this study show that:  Leadership by the public and private sectors, including elected officials, university presidents and industry representatives, is crucial to bring together public and private stakeholders in a region.  Investment of substantial public funds by the states over a substantial period, along with the development of intermediating institutions provides the foundation for progress. These investments also often have a catalytic effect, attracting private investments, as well as support from foundations and the federal government.  Sustained support by states for educational institutions can be important for long-term economic development. They provide the research facilities, a trained workforce, a flow of ideas for commercial development, and the branding that characterize successful regions.

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EXECUTIVE SUMMARY 3  Community colleges play an essential role in providing a trained workforce able to adapt to changing technologies and enable new opportunities.  Public-private partnerships facilitate the collaboration needed to develop the necessary workforce, provide and enrich research facilities and agendas, help develop new ideas, and support bringing the resulting products to the market.  Funding from philanthropic foundations can play a significant and often catalytic role in initiating, complementing, and sustaining action, by regional and state authorities.

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